National Broadcasting Legislation Amendment Bill 2009

Bills Digest no. 101 2009–10

National Broadcasting Legislation Amendment Bill
2009

WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.

To amend the Australian
Broadcasting Corporation Act 1983 (the ABC Act) and the
Special Broadcasting Service Act 1991 (the SBS Act) to
introduce a new board appointment process, and also to reinstate
the position of the staff-elected Director to the Board of the
ABC.

The amendments are part of the Australian Labor Party (ALP)
election commitments to provide a ‘new transparent and
democratic board appointment process in which non-executive
Directors are appointed on the basis of merit’.[1] The ALP also promised to
restore the staff-elected director on the Australian Broadcasting
Corporation (ABC) Board.

Under current law, the Managing Director is appointed by the ABC
Board for a period of 5 years (section 13 ABC Act). By definition,
the Managing Director is not a non-executive member of the Board
(section 3), and this Bill applies to the appointment of
non-executive Directors. Special provision is made for the new
position of the staff-elected Director as well.

The first staff-elected position was introduced by the Whitlam
Government without legislation in 1975, and subsequently abolished
by the Fraser Government. It was then created again in
1986.[2] In 2006, the
then Howard Government enacted the Australian Broadcasting
Corporation Amendment Act 2006 (the 2006 amendment) to remove
the position of staff-elected Director to the ABC Board on the
ground of perceived conflict of interest and ‘to ensure the
efficient functioning of the ABC Board. ... This change is in line
with modern principles of corporate governance and will also
provide more consistency in governance arrangements for Australian
Government agencies’.[3]

The reintroduction of the position of staff-elected Director in
this Bill is justified in similar terms by this Government, and it
may be the case that the future fate of the position will continue
to be determined by the flavour of the government of the day.

The ABC is an authority for the purposes of the Commonwealth
Authorities and Companies Act 1997 (the CAC Act) which means
that, as an independent statutory body, it is appropriate that it
is treated as legally and financially separate from the
Commonwealth.

The Bills Digest to the 2006 amendment explained the duties of
the Director as follows:

Currently, neither the CAC Act nor the ABC Act
make a distinction between the duties of the staff-elected Board
member and other members of the ABC Board. The statutory duty of a
staff-elected representative is not to the staff, specifically, any
more that it is for the other Board members. Therefore, a
staff-elected board member who places the interests of staff ahead
of the interests of the ABC as a whole could be in breach of their
duties under the legislation as it currently stands.[4]

The Liberal Party has stated that it remains opposed to the plan
to reinstate the position of staff-elected director to the ABC
Board on the basis that:

The position creates the potential for conflict
of interest with the staff-elected director legally bound to act in
the best interests of the Corporation, despite having been
appointed as a representative of staff and elected by them.[6]

The Liberal Party moved amendments to the Bill in the House of
Representatives on 4 February 2010 to remove the proposed
provision, and also to provide that former politicians and staff
only be banned from appointment within 18 months from ceasing their
employment. The Bill proposes a blanket ban on members and former
members of all Australian Parliaments, and persons who are or were
‘senior’ political staffers from being appointed to the
Boards of the ABC or the SBS (new subsection
12(5A)).

At the time when the previous Government abolished the position
of staff-elected Director, the Australian Greens opposed the change
and were strongly in favour of the staff-elected position on the
Board.[7]

In relation to persons who are ineligible for appointment, the
Department’s information on its website about the merit-based
appointment process outlines what is meant by ‘senior’
political staff which will be determined by the Minister by way of
legislative instrument (proposed subsection 3(3))
and will be defined as:

Chief of staff

Special adviser

Principal adviser

Senior adviser

Media adviser, and

Adviser.

A legislative instrument is a normally a disallowable
instrument, unless the relevant legislation declares it not to be.
However, no such declaration applies in this case.

Commenting on the merits-based provisions of the Bill, Dr
Meredith Edwards draws comparisons with the system in Britain, on
which the Bill is based, and states:[8]

There is no question that the process set out
in the Bill is a paradigm shift from the position until now –
on paper at least. Cronyism should be significantly reduced. The
power of ministers will be significantly constrained. But even the
best drafted legislation carries risks that the government’s
intentions are not carried through. Here, the British
implementation experience can alert us to potential pitfalls.

She illustrates that lessons from the British system could
improve the Bill by:[9]

requiring the Minister’s role to be spelt out in more
detail in a separate code of conduct

Items 4 to 12 of the Bill make changes to the
composition of and method of appointment of the Board.

Currently the ABC Act provides that the Board is to consist of a
Managing Director, and not less than 5, nor more than 7 other
Directors. Items 4-6 have the effect that the
Board will now also specifically make mention of the Chairperson,
and have not less than 4, nor more than 6 other Directors.[11]

The Governor-General appoints the Chairperson and the Directors,
but new subsection 12(5) provides that before
doing this, in the case of the Chairperson, the Prime Minister must
be satisfied of certain things, and in relation to the other
non-executive Directors, the Minister must be satisfied of certain
things. These things include that the person has experience
in connection with broadcasting, communications or management, or
experience in financial or technical matters, or have cultural or
other interests relevant to the oversight of a public organisation
providing broadcasting services (paragraphs 12(5) (c), (d),
and (e)). These requirements are the same that are
in the ABC Act currently.

Appointments for the Chairperson and Directors are part-time for
a period of 5 years (subsection 12(2)), and reappointment is
possible but the period of being in office cannot exceed 10 years
(new subsection 12(2A)).

Appointments of the Chairperson and Directors must comply with
new Part IIIA which inserts the merit-based
process into the ABC Act (new subsection 5B) but
this is not required for the reappointment to office (new
subsections 12(5C) and (5D)).[12]

Under new Part IIIA there is to be a Nomination
Panel (the Panel) established to oversight appointments to the
Board of the Chairperson and Directors. The Panel is to be made up
of a Chair and at least 2 and not more than 3, other members
(new section 24E). Members are appointed by the
Secretary of the Prime Minister’s Department (new
subsection 24F(1)), and the Panel is not subject to
direction by, or on behalf of, the Government (new section
24C).

The Bill is silent as to how the Secretary makes his or her
selection of panel members, and it is also silent as to how the
Chair becomes Chair. In practice, this decision is also made
by the Secretary, not by members of the Panel. On 21 October
2008 the Secretary announced[13] the appointments of Mr Ric Smith as Chair for
three years, and Professor Allan Fels, Ms Leneen Forde and Mr David
Gonski as members for various periods of time ranging from 2 to 3
years. The Secretary can also terminate appointments on
grounds such as misbehaviour, mental or physical incapacity,
bankruptcy, and unacceptable absence, to mention a few examples
(new section 24N).

In the selection process for the Chairperson of the Board, the
Panel is required to give a report to the Prime Minister on the
outcome of the selection process which provides a list of at least
three candidates nominated for appointment, along with a
comparative assessment of them (new paragraph
24B(1)(d)).[14] The Prime Minister must
then consult with the Leader of the Opposition before making a
recommendation to the Governor-General to appoint the person as
Chairperson (new subsection 24X). However, if a
person who has not been nominated is recommended for the position
of Chairperson, the Prime Minister will be required to table the
reasons for the appointment in both Houses of Parliament within 15
sitting days of the appointment. The Bill does not say that the
Prime Minister is required to consult with the Leader of the
Opposition in this latter case, but the Explanatory
Memorandum[15] says
that in addition to consulting with the Leader of
the Opposition the Prime Minister must also table his reasons, so
the consultation can be expected to occur in practice.

Similar provision is made in relation to the appointment of the
other non-executive Directors in that a report is given to the
Minister of Broadband, Communications and the Digital Economy
nominating at least 3 candidates for appointment (new
paragraph 24B(1)(d). If the Minister considers that a
person not nominated should be appointed, the Minister must give
the Prime Minister written notice specifying who should be
appointed and the reasons for the Minister preferring that person.
The Minister then must table his or her reasons in both Houses
within 15 sitting days of the appointment (subsections
24X(3) and (4)). The requirement to give the Prime
Minister ‘notice’ may suggest that the Prime Minister
must in practice also agree with the Minister. This
interpretation is supported in part by the Explanatory Memorandum
which states:

…the Minister must give the Prime
Minister a written notice that identifies that person and sets out
the Minister’s reasons for preferring that person over those
candidates nominated by the Nomination Panel (subsection 24X(3)).
If the Minister’s preferred candidate is
subsequently appointed by the Governor-General,
the Minister must table his or her reasons… (emphasis
added).[16]

The Department of Broadband, Communications and Digital Economy
also states on its website the Prime Minister’s approval is
required.[17]

The SBS Act is amended to incorporate changes so that the
Nomination Panel can also make recommendations to the Minister for
the appointment of the Chairperson and Directors of the SBS Board
(items 18-30). The Prime Minister does not have a
direct role in relation to the appointment of the Chairperson of
the SBS. The Minister must also consult with the Prime
Minister and table reasons if he or she asks the Governor-General
to appoint a person who has not been nominated by the panel
(new section 43B of the SBS Act).

Under this Schedule, the staff-elected Director is included on
the Board of the ABC (item 1­) and must be
elected in accordance with the regulations (new section
13A).

As noted in the note to new section 13A, as a
member of the Board, the staff-elected Director is a director of a
Commonwealth authority for the purposes of the CAC Act. The
CAC Act sets out the duties of a director which include:

Concluding comments

The Bill takes steps to make the appointment process to the
Boards of the Australian public broadcasters more arms-length from
the Government which go towards lessening the perception of
favouritism to the process. The inclusion of the reinstatement of
the staff-elected Director will have both its supporters and
detractors on the issue of improvement in governance practice.

[1]. A Albanese (Minister for
Infrastructure, Transport, Regional Development and Local
Government), ‘Second reading speech: National Broadcasting
Legislation Amendment Bill 2009’, House of Representatives,
Debates, 20 October 2009, p. 1164.